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Thursday, 25 April, 2002, 17:01 GMT 18:01 UK
ITV Digital close to meltdown
No buyer has come forward for the service
The UK's ailing pay-TV network ITV Digital is on the verge of being broken up, after the firm's court-appointed administrators ran out of money to keep the company going.

It is likely that customers will continue to receive free-to-air services - at least in the short-term

Deloitte & Touche
ITV Digital administrators
If the pay-TV service is not sold as a going concern within the next few days, its assets - including its set-top boxes and subscriber base - are likely to be sold off separately.

The move spells financial trouble for dozens of Football League clubs, who rely on a broadcasting rights deal with ITV Digital for 178.5m of income.

Free-to-air digital terrestrial channels such as BBC Choice, BBC News 24, BBC4, ITV2 and ITN News should continue to be available to ITV subscribers, even when the pay-TV service ceases.

Football rights

Football League officials were reluctant to comment on ITV Digital's collapse.

The rights for televising League games will now revert to the clubs, who will be free to find a new buyer for the contract.

It is highly unlikely they will receive offers anywhere near as lucrative as those made by ITV Digital.

One club - Lincoln - said on Thursday afternoon that in the light of the developments it had "parted company" with its current manager to save money.

The industry regulator, the Independent Television Commission (ITC), has warned that it will revoke ITV Digital's licence once the firm stops broadcasting its pay-TV services. The licence will then be offered for tender.

ITV Digital subscribers will soon lose paid-for services such as Sky Sports and ITV movie channels.

The BBC has said it will ensure that all viewers of terrestrial digital television will still be able to receive its services, and is now talking to the administrators to acquire some of the equipment used by ITV Digital for transmission.

The BBC will not enter the pay-TV business itself.

High-speed search for broadcaster

The ITC said it would liaise with the government and broadcasters "to ensure the continued availability to viewers of the digital terrestrial free-to-air public services".

And paid-for services could return soon. The commission has promised to start an "accelerated re-tender" for ITV Digital's broadcasting license soon, which could take as little as six weeks.

ITV Digital's backers, Carlton and Granada, are believed to have refused to continue funding the operation because of concerns over the length of time it would take to transfer its broadcasting licence to a buyer.

However, the ITC told BBC News Online they had offered to oversee the transfer of the licence in just two weeks - considerably shorter than the 11-month process by which it was awarded in the first instance.

Scared away

The administrators sounded a note of caution over free-to-air services, saying they could only be guaranteed "in the short-term whilst the sale process is concluded".

In a statement, Deloitte & Touche said they had "not been able to secure additional funding" to allow a controlled sale of the business as a going concern.

They also warned that they had only "a few days" to sell the business and assets.

Prospective buyers had apparently been scared away by worries over the cost of funding the company during the sales process.

As talks dragged on, fewer and fewer analysts thought it possible to sell the business as a going concern.

Digital television still on-air

Terrestrial digital television will continue to be broadcast, though, as free channels are transmitted unencrypted.

So no card or subscriber management service will be needed as long as viewers keep their set-top box.

ITV Digital customers should be able to get information about service availability on their television screens.

However, there is still some uncertainty about what happens to ITV Digital's set-top boxes - needed to receive the digital signal.

Only about 200,000 of ITV Digital's 1.2m subscribers bought their boxes outright, with the remainder being given the boxes with their subscription, meaning they effectively still belong to the company.

Recovering the boxes would be a very labour-intensive and costly process, though, and whoever buys ITV Digital's assets may decide that it would not be worth the effort.

The BBC's Rory Cellan Jones
"The business is likely to be broken up"
Shadow Media Secretary Tim Yeo
"We can't rely on just satellite or cable"
Swindon Town FC director Bob Holt
"I'm sure some names will go under"
See also:

25 Apr 02 | Football
Chairman urges solidarity
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